Company cars, cash alternatives and the way forward
Outside of pensions, Company Cars are often the most expensive benefit a company can provide. For many of our clients the cars represent the most common entry on P11Ds, and their costs often dwarf those of other benefits.
This has been a period of significant change in the way cars are taxed. Following a re-basing in 2002 that arguably made company cars attractive again as a benefit, from a tax and NIC perspective, annual rises in the percentage of list price charged have quietly driven up the cost of operating a company car fleet by many times the rate of inflation. For example, on a BMW 330e the tax and NIC you pay will increase by 129% between 2016 and 2021.
From April 2017 the situation became more complex with new rules that will now tax car cash allowance values (if higher) rather than the value of the car that the employee may have chosen to take, along with salary sacrifices.
This throws a spotlight on a benefit that many companies have not reviewed for several years. In particular the focus is on:
- Do the numbers still add up?
- Are the cash allowances appropriate relative to the cars?
- Are existing funding options, and their suppliers, still appropriate.
In our experience substantial savings can be created by reviewing these arrangements.
EmphaCIS has developed a suite of solutions to help employers get the best from their company car and cash alternative options. Our services include:
- A holistic review of your company car and cash alternatives arrangements to include modelling likely costs moving forwards under different options to identify possible savings and rating these by complexity of implementation.
- Our services focus on the costs of your existing arrangements – including commenting on existing funding options, suppliers, fuel policy, relationship between the car and the cash option, and alternatives and their likely impact on employee and employer.
- Where appropriate we can help you change aspects of the scheme – including as appropriate changing suppliers
- We provide tools to administer, via payroll, Employee Car Ownership and Cash Optimisation schemes.
- We can assist with obtaining regulatory approval for new arrangements (where required)
- We also help with employee communication.
EmphaCIS would welcome the opportunity to meet with you to discuss your company cars, cash alternatives and the way forward.